You’d first fill up your iPhone with credits using the device information pane in iTunes…

When buying an iPhone app from App Store or a song via iTunes Music Store, a network connection is required – not only to deliver purchases, but also to process payments using your credit card on file or iTunes Store credits. That could change in the not-so-distant future as Apple lays out in excruciating detail a system allowing for on-device offline purchases of digital warez. Ruling out real-time credit card transactions for obvious reasons, Apple proposes storing iTunes credits (currently obtainable as iTunes Gift Cards) on the device itself. This, in turn, will be your primary mean of payment while offline. Your device would sync settled offline purchases made offline with a remote payment processing entity (iTunes Store) when you are back online to ensure your account balance is up-to-date:

This is directed to providing offline purchasing of media items using an electronic device. One or more media items that are not part of a user’s media library can be stored on an electronic device. When a user later wishes to play back one of the media items, but the device cannot connect to a communications network to provide payment information for purchasing the media items, the electronic device can use pre-paid credits that were purchased and stored by the device when a communications network was available to complete the purchase. By using pre-paid credits, the media store can be assured that the user has sufficient funds for the media item purchase.

There’s only one problem with this invention, credited to engineer Taido Nakajima – you’d still need a network connection in order to download stuff bought offline. Don’t worry, Apple thought of that, too…

A storefront program – in this case the iOS iTunes app – would label locally cached and restricted content and let you both purchase and immediately consume items, even offline.

In Layman’s terms, a device would locally cache media items not yet owned by the user and restrict access until they are purchased, either online or offline. With an on-device offline purchase the system would deduct the cost of the item bought from the locally stored credits and unlock the item for consumption. The entire App Store catalog with meta data could be cached, Apple explains, allowing you to browse and discover apps while offline. Furthermore, “one or more recommended media items” could be cached so you could in theory buy those items and immediately begin enjoying them without a network connection. Items bought offline but not cached on the device could be transferred to the user’s media library “at any suitable time”:

The recommended items can be selected based on any suitable criteria, including for example the media items of the user’s library, recently played back media items, media item rankings, recently purchased or added media items, a preference profile defined by the user, or combinations of these. In some embodiments, the recommended media items can be selected based on playback or sale information provided by other users (e.g., the top selling media items in the media store, or the recently purchased media items by users in a local network). When the electronic device is connected to the host device, the host device can transfer the recommended media items to the electronic device for local storage.

Apple, of course, runs iTunes Genius, a cloud-based recommendation engine that analyzes your past purchases and habits of the millions of people who opt-in to Genius. To retrieve more information about Apple’s patent application, enter the ID 20110178896 into the USPTO search engine.

Upon using up all credits stored on the device, you’d be reminded to purchase more iTunes credits online.